Car Parking Spaces Independent of Flat sold to Other Members shall be Assessed as Short Term Assets: ITAT [Read Order]

The Income Tax Appellate Tribunal, Mumbai bench has held that the car parking spaces which are independent of the flat and is distinguishable from the cost of improvement, was rightly treated as short term capital assets by the department when sold to other members of the society.

The assessee, an individual, bought a flat in question was purchased for Rs.1,29,15,665/- whereas the balance-sheet for the year under consideration reflected it at Rs.1,23,90,665/-. When enquired, the assessee explained that the difference of Rs.5, 25,000/- pertains to the cost of two basement car parking sold along with the flat. The only issue dispute in this appeal is whether the capital gain arose in respect of sale of three car parking spaces could be treated as long term capital gain. The assessing officer held the same as short term capital gain as, in his opinion, the car parking spaces are independent of the flat in question and the assessee sold all three car parking spaces within 36 months of their purchase.

The Tribunal bench comprising Shri Sandeep Singh Karhail (Judicial Member) And Shri Gagan Goyal (Accountant Member)  observed that in respect of the other two car parking areas, we find that the assessing officer has recorded a clear finding that the assessee himself has accounted the assets in different entities; therefore, the assets are independent of the flat and is distinguishable from the cost of improvement.

“Further, the parking spaces can be sold and purchased to and from the members of the society independently. Further, as per the books of the firm in which the assessee is a partner, the car parking spaces were transferred to the assessee in the financial year 2012-13 only. Therefore, in our considered opinion, the capital gain arising from the sale of these two car parking spaces is only ‘Short Term Capital Gain’. In this view of the matter, we have to necessarily uphold the finding of the learned CIT(A) that the parking spaces are independently identifiable asset on different dates, the capital gain arose from sale of these two parking spaces is ‘Short Term Capital Gain’. The assessing officer has rightly assessed the gain as Short term capital gain in the case of other two parking spaces,” the Tribunal said.

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